When it comes to placing a home for sale, there is one very important detail that sellers often overlook. This common oversight can cost thousands or even tens of thousands of dollars. On the listing contract, there is a line for the real estate commission. Let's pretend that you and your agent have agreed to 5%. The question is: how is that 5% going to be divvied up?

Realize that the fee actually has two components: one for the selling office, the other for the buyer's office. Instead of writing the total on the contract, why not put in what it actually is? A common commission split would be 2%/3%, the latter to the buyer's broker. If your representative is willing to list your home for 2%, why should they get a 3% bonus simply because the purchaser shopped alone? A lot of transactions come from someone accidentally driving by a property and grabbing a flyer. Sometimes someone in the neighborhood may have told them about the offering. It happens all the time. People just show up, and since the details were not specified in the agreement, the listing agent gets a windfall bonus.

If there is no representative on the purchase side of the transaction, the fee should be what the salesperson would have made if there had been a broker on both sides of the deal. If the same person represents both parties, a special arrangement can be penciled in for that in the document. Never write the percentage as a total on the agreement. Simply write the amounts that will actually be distributed, such as 2%/3%, 3%/3%, or whatever you have negotiated. Make certain to delineate which percentage goes to whom. It's as simple as that.

Copyright © 2008 Wade Young.

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